Rice under fire from left as Kerry's name won't go away

One of the most controversial energy projects in the nation also has become a flash point in the drama surrounding who may become the next secretary of state – and it’s coming from the left instead of the right.

Back on Nov. 28, “OnEarth,” published by the Natural Resources Defense Council, dug into U.N. Ambassador Susan Rice’s financial disclosures and found that she and her husband have a stake in TransCanada, the company pushing for the Keystone XL Pipeline to be built.

NRDC officials say it's an important issue that must be discussed during the nomination process. But the timing of the report raises questions, as it is being surfaced by an environmental activist community that has previously given support to another potential secretary of state candidate – Massachusetts Sen. John Kerry.

The decision on whether to approve the pipeline goes through the State Department.

“If confirmed by the Senate, one of Rice’s first duties likely would be consideration, and potentially approval, of the controversial mega-project,” Scott Dodd at “OnEarth” wrote. “Rice's financial holdings could raise questions about her status as a neutral decision maker.”

Dodd noted that “Rice owns stock valued between $300,000 and $600,000 in TransCanada, the company seeking a federal permit to transport tar sands crude 1,700 miles to refineries on the Texas Gulf Coast, crossing fragile Midwest ecosystems and the largest freshwater aquifer in North America.”

Bill McKibben, an anti-pipeline activist, told the publication: “It’s really amazing that they’re considering someone for Secretary of State who has millions invested in these companies. The State Department has been rife with collusion with the Canadian pipeline builders, and it’s really distressing to have any sense that that might continue to go on.”

Susan Casey-Lefkowitz, the NRDC's director of international programs, sounded a less strident tone a day later: "What's most important is that she rid herself of her holdings in TransCanada and other tar sands-related companies, and we're confident she will do that ... What's most important is that we have a good, thorough review done.”

Danielle Droitsch, a senior attorney for the NRDC and director of the Canada Project, told First Read: “We think Ambassador Rice has the credentials to be secretary of state, but if she were nominated, and then appointed, these holdings would have to be addressed.”

She added that “high-level officials dealing with Keystone should not have any conflicts of interest.”

The likelihood is that, if nominated, Rice will have to divest herself of her TransCanada investment to avoid a conflict of interest.

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The environmental group’s effort to shed light on Rice’s financial interest in TransCanada could be just an attempt, if Rice is nominated, to get a “thorough review” and make sure it has a staunch ally in trying to thwart the project, as Casey-Lefkowitz said.

But could it also be a signal that the NRDC prefers another candidate for the job – Kerry, the other of the final two candidates reportedly being considered for the post?

After all, environmental groups have strongly supported Kerry in the past and have a long working relationship with him. Like they would for most Democrats in a presidential election, for example, the NRDC and the League of Conservation Voters, among others, ran ads in the 2004 election boosting Kerry.

LCV even endorsed Kerry before the New Hampshire Democratic primary that year, although it has notably not spoken out about Rice.

Droitsch, however, would not address whom the NRDC prefers for the job.

“We’re trying to signal that the pipeline decision has to be conflict-free,” Droitsch said. “That would pertain to any potential nominee. The president has the prerogative to nominate the person he believes is best for the position.”

The Senate will then raise questions, however, she said. And “now is important to raise the issue ... We want to make sure that anyone who’s being considered would be free of those conflicts. That’s our primary interest right now.”

The NRDC, which has been very involved in efforts to block Keystone, is the environmental interest group most pressing the issue of Rice’s financials.

But others might not be as keen to see Kerry leave Capitol Hill. After all, consider that green groups already spent a lot of money trying to oust Republican Scott Brown from the Senate – and were successful.

But if Kerry becomes secretary of state (or even defense secretary), his seat would become vacant, raising the potential for a costly and competitive special election.

“Who cares if the U.N. ambassador has a TransCanada stock. Who cares if the head of the FDA has TransCanada stock,” said a Democratic strategist and ally of the administration who is a veteran of confirmation battles.

“If she [Rice] were to be nominated, she would go through a process by which we look for financials conflicts. Maybe this stock would be identified as something that posed a conflict, and she would sell," the strategist said. "But she hasn't gone through that process, because she's not a nominee to anything. If they want to say that if she is the nominee, she should sell the stock, that's fine. But you can't legitimately hit her for having it now. And that is likely why NRDC backed off and no other environmental groups have piled-on.”

What really is going on here likely has less to do with Rice and whether she should ascend to secretary of state, and more with the NRDC leveraging pressure on the president and the administration to make sure the pipeline is rejected again once it comes up for approval. And that could be soon.

The next step in that approval phase, in fact, could come as early as next week, Droitsch said. TransCanada has applied for a shortened pipeline in hopes of having that approved – something the NRDC strongly opposes. A Supplemental Environmental Impact Statement could be released by the State Department as early as next week, Droitsch said.

“It is critically important for there to be independent decision-makers, free of conflict of interest, who can take an independent view,” she said.

She then tied the administration’s decision on the pipeline to climate change, an issue that has regained prominence as a result of Hurricane Sandy. In the days following Sandy’s landfall, in fact, New York Mayor Michael Bloomberg endorsed President Barack Obama for his leadership on climate change.

How Obama decides on the pipeline “signals where the U.S. is headed in terms of importing dirty fuels, inconsistent with an administration that is committed to fighting climate change,” Droitsch said.

“We’re confident President Obama understands the seriousness around the issues surrounding this pipeline. Approving it sends the wrong signal about our country’s commitment to climate change. Yes, he’s under a lot of pressure, but the public is very concerned about this. It’s not a decision I know he’ll view lightly.”